LITC must comply with the following conditions after the granting of its licence and commencement of its business:
Post 17 April 2020, new Labuan companies that intend to trade in Non-Petroleum commodities are required to be part of the GIFT programme.
Apart from the tax incentives as accorded under the Labuan Business Activity Tax Act 1990 subject to fulfilment of the tax substantial activity requirements, the non-deductibility rules under P.U.(A)375/2018 dated 31 December 2018 is not applicable to transactions between LITC and Malaysian residents.
The revised Guidelines have reinstated the non-petroleum commodities to be included back into the GIFT Programme. For regulatory purpose and to enable the company to enjoy the tax incentives under GIFT Programme, the non-petroleum LITCs that have surrendered their licences should submit its application for licence as soon as practicable.
For regulatory purpose, the policy expectation on the compliance to the revised Guidelines would be made on practical basis i.e. assessment against a full year’s operation as regards the annual quantitative requirements.
However, for the purpose of complying with tax substantial activity requirements, once licensed, it is deemed to have commenced operation and is subjected to the said requirements. For annual operating expenditures however may be pro-rated on a 12-months basis.
LITCs that are unable to achieve the operational requirements under the revised Guidelines would be treated as non-compliant to the said Guidelines and be dealt with accordingly under the Labuan Financial Services and Securities Act 2010. Notwithstanding this, the LITCs may write to Labuan FSA if they foresee that they are not able to meet any of the operational requirements. Labuan FSA may consider the application based on the merit of each case
The definition of Professional Traders has been expanded under the revised Guidelines in which Principal Officer and any officer performing senior managerial functions in specified areas may also be recognised as Professional Traders.
Para 6.7 is to cater for LITCs that are undertaking businesses that are ancillary to the trading of permissible commodities such as leasing, trading, consultancy etc. Hence, proper segregation of accounts is required.
The LITCs are still allowed to operate in any parts of Malaysia. For the purpose of complying with the tax substantial activity requirements to enjoy the benefits accorded under the GIFT programme, Labuan FSA wishes to further clarify the following: